US Government Explores Equity in Chip Firms Amid CHIPS Act Funding

U.S. Commerce Secretary Howard Lutnick is exploring federal government equity stakes in computer chip manufacturers receiving CHIPS Act funding. This initiative expands on a plan to secure an equity stake in Intel in exchange for cash grants.

Lutnick is also exploring similar equity arrangements for companies such as Micron, Taiwan Semiconductor Manufacturing Co, and Samsung. Much of the CHIPS Act funding has not yet been dispersed to these firms.

White House press secretary Karoline Leavitt confirmed on Tuesday that Lutnick is working on a deal for a 10% government stake in Intel. Leavitt stated that President Trump prioritises America's needs from both a national security and an economic perspective, characterising the idea as creative and unprecedented.

While Lutnick previously stated the U.S. does not intend to dictate Intel's operations, any government investment would be unprecedented and increase U.S. influence on major companies. Historically, the U.S. has acquired stakes in firms to provide cash and foster confidence during periods of economic uncertainty.

In a related move earlier this year, President Trump approved Nippon Steel's acquisition of U.S. Steel. This approval included a "golden share" intended to prevent the companies from reducing investments, delaying promised investments, transferring production or jobs outside the U.S., or closing plants without presidential consent.

Credit: Stefani Reynolds/Bloomberg

Treasury Secretary Scott Bessent is involved in the CHIPS Act discussions, though Lutnick is leading the process. The Commerce Department oversees the USD 52.7 billion CHIPS Act, formally known as the CHIPS and Science Act, which provides funding for research and grants for constructing chip plants in the U.S..

Lutnick has advocated for the equity idea, which President Trump supports. The U.S. Commerce Department finalised subsidies late last year, providing USD 4.75 billion for Samsung, USD 6.2 billion for Micron, and USD 6.6 billion for TSMC to produce semiconductors in the U.S..

In June, Lutnick mentioned the department was renegotiating some grants from former President Joe Biden's administration, describing them as "overly generous". Micron had offered to increase its spending on U.S. chip plants at that time.

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• U.S. Commerce Secretary Howard Lutnick is exploring federal government equity stakes in computer chip manufacturers receiving CHIPS Act funding.

• This initiative extends beyond Intel to include companies like Micron, Taiwan Semiconductor Manufacturing Co (TSMC), and Samsung.

• The government's aim is to prioritise America's national security and economic interests, with this approach being described as unprecedented.

Source: REUTERS